At the beginning of 2013, Norris Company had a deferred tax liability of $6,100, because of the use of MACRS depreciation for income tax purposes and units-of-production depreciation for financial reporting. The income tax rate is 30% for 2012 and 2013, but in 2012 Congress enacted a 40% tax rate for 2014 and future years.

Norris's accounting records show the following pretax items of financial income for 2013: income from continuing operations, $156,000 (revenues of $346,000 and expenses of $190,000); gain on disposal of Division F, $21,400; extraordinary loss, $11,100; loss from operations of discontinued Division F, $11,300; and prior period adjustment, $14,700, due to an error that understated revenue in 2012. All of these items are taxable; however, financial depreciation for 2013 on assets related to continuing operations exceeds tax depreciation by $4,200. Norris had a retained earnings balance of $154,000 on January 1, 2013, and declared and paid cash dividends of $40,000 during 2013.